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Markets Score 42 Bullish

SCHD Executes Massive Portfolio Shift, Slashing Energy Exposure

Apr 14, 2026 12:20 UTC
SCHD, UNH, ABT, PG, ABBV, CSCO
Medium term

The Schwab U.S. Dividend Equity ETF has undergone one of its largest annual reconstitutions to date, significantly reducing its energy weight. The fund added 25 new holdings while removing 22 to better balance its dividend-focused strategy.

  • Portfolio turnover spiked to 31%, significantly above the historical 8-15% average
  • Energy sector exposure was reduced from 23.5% to 16.3% following strong performance
  • 25 new stocks were added, including UnitedHealth Group and Procter & Gamble
  • Major removals included former top-10 holdings AbbVie and Cisco Systems
  • Healthcare and technology sectors saw the largest increases in weighting

The Schwab U.S. Dividend Equity ETF (SCHD) has completed a major overhaul of its holdings following the March 2026 reconstitution of the Dow Jones U.S. Dividend 100 Index. The adjustment marks a significant departure from historical norms, with portfolio turnover reaching 31%, compared to a typical range of 8% to 15%. The rebalance was primarily driven by a strategic reduction in energy sector exposure after a period of strong gains. The index's energy weighting dropped from 23.5% to 16.3%, effectively locking in profits from a sector that had surged due to geopolitical tensions involving Iran. In a sweeping move, the fund added 25 new stocks and removed 22. Notable exits include former top-10 holdings AbbVie and Cisco Systems. Conversely, the ETF welcomed UnitedHealth Group as its largest new addition, alongside Abbott Labs and Procter & Gamble. Healthcare and technology sectors emerged as the primary beneficiaries of the shift. By diversifying away from the volatile energy sector and focusing on balance sheet strength and operational efficiency, the fund aims to avoid value traps and ensure sustainable dividend growth for its investors.

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